The U.S. Securities and Exchange Commission (SEC) has filed charges against a sprawling network of cryptocurrency companies alleged to have stolen more than $14 million from American retail investors.On Monday, the U.S. District Court for the District of Colorado received a lawsuit from the SEC outlining a complex scheme that lasted from January 2024 to January 2025 and made use of advanced deceptions through the use of modern technology including but not limited to artificial intelligence (AI), deepfake videos, and encrypted communication systems in order to identify and exploit victims for maximum gain.
The SEC’s case includes three alleged trading platforms — Morocoin Tech, Berge Blockchain Technology, and Cirkor — and four so-called investment “clubs” — AI Wealth, Lane Wealth, AI Investment Education Foundation, and Zenith Asset Tech Foundation — all of which supposedly collaborated together to deceive investors into an online “trap” which ultimately led to their life savings being transferred out of the country and into foreign bank accounts.
The “Investment Club” Mirage
The SEC’s 29-page lawsuit details how the scheme began via online ads on various social media platforms rather than through cold calls. The ads claimed that users could make money easily while providing them with special access to AI-powered investment strategies. Once users expressed interest in the ads, the scammers invited them to chat with other potential victims on private WhatsApp groups branded as high-end “investment clubs.”
Once they were invited to these private WhatsApp groups, the individuals who were to become victims were introduced to a sophisticatedly designed community of fake investment specialists, who provided daily updates about the marketplace and interacted with members through chat features. The goal of this systematic process of building trust is known in cybersecurity as “pig butchering,” where a potential victim’s defenses are gradually lowered prior to the solicitation of their money through fraudulent means.
Fake Professors and AI “Signals”
In their presentations, the groups portrayed themselves as highly authoritative. They did this through the use of the titles of “professor” and “assistant,” which implied a very formal level of expertise. They represented themselves as providing the community with the latest in trading practices. The SEC warned about the negative implications for technology in facilitating this type of deception. These operators are also alleged to have used deepfake video technology showing famous people, including Elon Musk, with fake investment advice to get around KYC (Know Your Customer) regulations and create an illusion of legitimacy.
The “professors” then provided investment recommendations which they claimed were generated from advanced AI technology. By promoting these recommendations as “AI-backed signals,” the scammers were able to ride the current hype wave of AI technology to convince their victims that they were ahead of the curve in terms of how to invest in the markets correctly.
The Phantom Platforms
The “professors” encouraged members to transfer their funds into select crypto trading sites including Morocoin, Berge and Cirkor, as soon as trust had been established.
The crypto trading sites were intentionally set up to imitate legitimate exchange sites, displaying real-time price feeds as well as speeded-up trades that had great profit returns for customers of the sites. According to the SEC, the crypto trading sites presented themselves as licensed and regulated by providing fraudulent documents of approval from governmental agencies.
Furthermore, the “investment clubs” promoted exclusive Security Token Offerings (STOs) under fictitious names. According to the complaint, investors were led to believe they were purchasing early-stage investments in real businesses; however, the complaint states that neither the respective companies nor the investment offerings existed. The “profits” users saw on their screens were nothing more than digital fiction.
The Double Dip: Fees and Frozen Funds
The methodical procedure of the fraudulent system is very similar for most fraudulent investigators. After the initial funding, the platform operators implement another type of pressure tactic when customers try to cash out their supposed “winnings.” Each of the customers would then suddenly be asked to pay a hefty “fee” or “tax fee” to be able to access their account balance. The SEC points out this is a common method used by fraudulent schemes to inflict further financial damage on already-invested individuals. While many victims want to get their original investment back, they typically pay that amount and are then ignored by the operators of the fraudulent scheme.
A Global Web of Deceit
Investigators followed the money of the $14 million in theft, as it moved through a complicated system of crypto wallets and international bank accounts. The complaint alleges that investor funds were ultimately misappropriated entirely and redirected to a network of accounts held by individuals in Southeast Asia, complicating recovery efforts.
“This matter highlights an all-too-common form of investment scam that is being used to target U.S. retail investors with devastating consequences,” said Laura D’Allaird, Chief of the SEC’s Cyber and Emerging Technologies Unit. She noted that the key element was the “technology-aided perception of expertise” that specifically targeted investor psychology.
The SEC is lobbying for a permanent injunction and civil penalties against all parties involved, and this case should act as a cautionary tale; with today’s technology, it has become extremely difficult to differentiate a legitimate financial investment opportunity from a fake (digital) opportunity.
